ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT ("this Agreement") is made as of December 31,
2004 among LASER FARE, INC., a Rhode Island corporation ("Seller"), INFINITE
GROUP, INC., a Delaware corporation (the "Shareholder"); and ROLBEN ACQUISITION
COMPANY, a Rhode Island corporation ("Buyer").
RECITALS:
A. Seller is engaged in the business of laser manufacturing.
B. The Shareholder owns all of the issued and outstanding capital stock of
Seller; and
C. Buyer desires to purchase substantially all of the business and assets
of Seller, and Seller and the Shareholder desire that Seller sell such business
and assets to Buyer under the terms of this Agreement.
NOW THEREFORE, in consideration of the mutual promises contained in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 Assets to be Purchased and Sold. Effective the date hereof, Seller
shall sell and convey to Buyer, and Buyer shall purchase and acquire from
Seller, all of the business and tangible and intangible assets of Seller
existing and owned by Seller as of the date hereof other than the Excluded
Assets (defined in Section 1.2). The assets of Seller to be purchased hereunder
(which exclude the Excluded Assets) are referred to as the "Purchased Assets".
The Purchased Assets shall include without limitation all goodwill and the
following assets and property:
(a) all personal property such as (without limitation) machinery,
equipment, tools, dies, molds, drawings, furniture and fixtures, inventories and
raw materials and supplies, work-in-progress and finished goods, customer lists,
customer purchase orders, and goodwill;
(b) all rights, title and interest in and to Seller's intellectual
properties, such as (without limitation) know-how, trade secrets, trademarks,
trade names, copyrights, patents and other rights or registrations, internet
domain names and the name "Laser Fare";
(c) all accounts receivable of Seller;
(d) all rights of Seller in, to and under a certain Lease Agreement
dated as of June 1, 1992 (the "RIIFC Lease") between Seller and Rhode Island
Industrial Facilities Corporation ("RIIFC");
(e) all rights under the contracts, leases and agreements described
or referred to in Exhibit A hereto (the "Operating Agreements"), true and
correct copies of which are being delivered to Buyer concurrently with this
Agreement;
(f) all executory or continuing agreements and other contracts or
commitments for the procurement of products entered into in the ordinary course
of the Business ("Customer Orders"), including those, if any, listed in Exhibit
B hereto;
(g) all books and records of Seller, including operating records,
property records, purchasing and sale records and any computer software relating
thereto; and
(h) all cash.
1.2 Excluded Assets. The Purchased Assets shall not include (a) any
intercompany credits due to Seller from Shareholder, (b) any intellectual
property relating to the Grating Coupled Surface Emitting Laser ("GCSEL")
technology or (c) any property of Infinite Photonics, Inc. located at Seller's
facilities (the "Excluded Assets").
ARTICLE II
LIMITED ASSUMPTION OF LIABILITIES
2.1 Assumption of Liabilities. Concurrently herewith, Buyer shall assume
and be responsible for the following liabilities of Seller and Shareholder (the
"Assumed Liabilities"):
(a) obligations under the RIIFC Lease and the related Industrial
Revenue Bond due June 2012 (the "RIIFC Obligations") to Rhode Island Industrial
Facilities Corporation ("RIIFC") to the extent provided in a certain Assignment
of even date by Seller to Buyer;
(b) obligations with respect to accounts payable, Employee
Obligations (defined below) and other related obligations incurred in the
ordinary course of Seller's business consistent with prior practices and
obligations, if any, for payments in lieu of taxes to the Town of Smithfield as
required under the RIIFC Lease ("Smithfield Taxes");
(c) obligations under the Operating Agreements and Customer Orders;
(d) obligations, if any, to University of Rhode Island ("URI"); and
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(e) obligations, if any, to National Center for Manufacturing
Sciences ("NCMS") for certain royalties pursuant to letter agreement dated March
23, 2000 (the "NCMS Obligations")
The term "Employee Obligations" shall mean to the extent unpaid in the
ordinary course of business (i) regular payroll obligations for the pay period
from January 1, 2004 through the closing date and (ii) vacation pay, sick pay
and 401(k) contributions for the period from January 1, 2004 through the closing
date to the extent not previously paid.
2.2 Excluded Liabilities. Apart from the Assumed Liabilities, Buyer will
neither assume nor have any responsibility for any obligations, liabilities or
indebtedness of Seller of any kind. All such obligations, liabilities and
indebtedness of Seller, except the Assumed Liabilities, are referred to as the
"Excluded Liabilities". The parties expressly acknowledge and agree that the
Excluded Liabilities include (a) intercompany liabilities due to Shareholder
from Seller, (b) obligations, if any, to Messrs. Xxxxx, Feeley, McDonald,
Xxxxxxx or Xxxxxxxx or other current or former employees of Seller and/or
Shareholder (including obligations on account of withholding and similar taxes)
except Employee Obligations, (c) income taxes, if any, of Seller, (d)
obligations, if any, of Seller and/or Shareholder to Spectra Science and (e)
fees of lawyers and accountants of Infinite or Seller other than those to
Xxxxxx, Xxxxx & Riley, Bulkley, Xxxxxxxxxx & Xxxxxxx and Xxxxxxx & Xxxxxxxxx
LLP.
ARTICLE III
PURCHASE PRICE AND PAYMENT
3.1 Purchase Price. The consideration for the Purchased Assets shall be
the Assumed Liabilities and the execution and delivery by Buyer of its
promissory notes of even date in the original principal amounts of $50,207.37,
$697,990.11, $974,109.99 and $415,000.
3.2 Allocation of Purchase Price. The consideration for the Purchased
Assets will be allocated between Seller and among the Purchased Assets as
provided in Section 1060 of the Internal Revenue Code of 1986, as amended. Each
of Buyer and Seller agrees that it will adopt and utilize the amounts so
allocated for purposes of all federal, state and other tax returns filed by it
and it will not voluntarily take any position inconsistent therewith upon
examination of any such tax return, in any claim, in any litigation or otherwise
with respect to such tax returns. The provisions of this Section 3.2 shall
survive the Closing Date without limitation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER
To induce Buyer to enter into this Agreement and to purchase the Purchased
Assets, Seller and the Shareholder, jointly and severally, represent and warrant
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to Buyer that, except as otherwise known by Xxxxxxxx X. Xxxxxxxxx ("CGB") or
Xxxxxx Xxxxxxxx (together, "Buyer's Principals"):
4.1 Corporate Organization and Authority.
(a) Seller is a corporation duly organized and validly existing in
good standing under the laws of Rhode Island with full corporate power and
authority to conduct its business as now conducted, to own its assets and enter
into and perform its obligations under this Agreement. Seller's execution,
delivery and performance of this Agreement and the sale to Buyer of the
Purchased Assets have been duly authorized by all requisite corporate action on
the part of Seller. This Agreement constitutes, and all bills of sale,
assignments, agreements and other instruments and documents to be executed and
delivered by Seller hereunder will constitute, Seller's legal, valid and binding
obligations, enforceable against Seller in accordance with their respective
terms.
(b) The Shareholder is a corporation duly organized and validly
existing in good standing under the laws of Delaware with full corporate power
and authority to conduct its business as now conducted, to own its assets and
enter into and perform its obligations under this Agreement. The Shareholder's
execution and delivery and performance of this Agreement have been duly
authorized by all requisite corporate action on the part of the Shareholder.
This Agreement constitutes, and all documents and instruments to be executed and
delivered by the Shareholder hereunder will constitute, the Shareholder's legal,
valid and binding obligations, enforceable against the Shareholder in accordance
with their respective terms.
4.2 Subsidiaries, Foreign Qualification and Ownership.
(a) Seller has no subsidiaries and no other equity investments in
any other corporation, partnership or other business entity. Seller is not
required to qualify to transact business as a foreign corporation in any
jurisdiction.
(b) Seller's authorized capital stock consists of 2,000 shares of no
par value common stock, of which 1,173 shares have been duly authorized for
issuance, have been validly issued and are outstanding, are fully paid and
non-assessable, and are owned of record and beneficially by the Shareholder.
4.3 Absence of Conflicts and Consent Requirements.
(a) Seller's execution and delivery of this Agreement and
performance of its obligations hereunder will not (i) conflict with, violate or
result in any breach or default or, with notice or lapse of time constitute a
default, under (A) Seller's Articles of Incorporation or Bylaws, or (B) subject
to consent by First International Bank and/or UPS Capital Business Credit (the
"Bank") and RIIFC any mortgage, indenture, agreement, instrument or other
contract to which Seller is a party or by which Seller or its property is bound,
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(ii) result in the creation of any mortgage, pledge, lien, encumbrance or charge
upon any assets or properties of Seller, or (iii) violate any judgment, order,
decree, law, statute, regulation or other judicial or governmental restriction
to which Seller or any of its assets is subject or by which it is bound.
(b) The Shareholder's execution and delivery of this Agreement and
performance of its obligations hereunder will not (i) conflict with, violate or
result in any breach or default or, with notice or lapse of time constitute a
default, under (A) the Shareholder's Certificate of Incorporation or Bylaws, or
(B) any mortgage, indenture, agreement, instrument or other contract to which
the Shareholder is a party or by which the Shareholder or its property is bound,
(ii) result in the creation of any mortgage, pledge, lien, encumbrance or charge
upon any of the purchased assets, or (iii) violate any judgment, order, decree,
law, statute, regulation or other judicial or governmental restriction to which
the Shareholder or any of its assets is subject or by which it is bound. The
Shareholder's execution and delivery of this Agreement and performance of its
obligations hereunder, will not require the consent of, or any prior filing with
or notice to, any governmental authority, lender or other third party, and any
such consent, filing or notice will be received or delivered, as the case may
be, on or prior to the Closing Date.
4.4 Financial Statements. Seller has delivered to Buyer true and correct
copies of the unaudited balance sheets for recent periods (the "Balance Sheet")
and its related statements of income and retained earnings and cash flows (the
"Financial Statements"). The Financial Statements (a) present fairly the
financial position of Seller at the periods then ended and the results of its
operations and cash flows for the periods then ended, (b) have been prepared in
accordance with GAAP consistently applied, (c) show all material liabilities,
absolute and contingent, of Seller required to be shown by generally accepted
accounting principles ("GAAP") and (d) contain no misrepresentations,
misstatements or omissions of material facts.
4.5 Absence of Certain Changes. Since the date of the Balance Sheet, there
has not been any material adverse change in the financial position of Seller or
in the results of its operations or to its assets, properties or business.
4.6 Title to Assets.
(a) Contract Rights. The rights of Seller under the Operating
Agreements and the Customer Orders are valid and enforceable by Seller and will,
at the Closing, be validly assigned to and thereupon enforceable by Buyer, in
each case in accordance with their respective terms. Neither Seller nor any of
the other parties thereto is in default in any material respect (nor does any
circumstance exist which, with notice or the passage of time or both, would
result in such a default) under any of the Operating Agreements or Customer
Orders, and the assignment by Seller of its rights thereunder to Buyer will not
violate the terms thereof.
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(b) Purchased Assets. Except for security interests granted to the
Bank (the "UPS Security Interests") and except for rights of RIIFC and others in
connection with the RIIFC Obligations and rights of URI, Seller has good and
marketable title to the Purchased Assets, free and clear of all liens, claims,
security interests and encumbrances and has the right to convey the Purchased
Assets to Buyer.
4.7 Loss Contingencies. There are no claims, actions, suits or other
proceedings pending, or to the knowledge of Seller threatened, against Seller or
any of the Purchased Assets before any court, agency or other judicial,
administrative or other governmental body or arbitrator, and to Seller's
knowledge, no state of facts exists which would be likely to give rise to any
such claim, action, suit or other proceeding.
4.8 Compliance With Law. Seller has complied with, and is in compliance
with, all laws, statutes, regulations, rules and other requirements of any
governmental authority applicable to Seller, its assets and properties and the
conduct of its business.
4.9 Taxes.
(a) Returns and Payment of Taxes. All Federal, state and local
income, excise or franchise tax returns, real estate and personal property tax
returns, sales and use tax returns and all other tax returns required to be
filed on or prior to the date hereof by Seller with all taxing authorities have
been or prior to the date hereof will have been filed. Except Smithfield Taxes,
all amounts shown to be due and payable on such returns, all other taxes, duties
and other governmental charges payable by Seller or imposed upon any of the
Purchased Assets and for the payment of which there may arise any lien upon the
Purchased Assets sold hereunder subsequent to such sale, and all deficiencies,
assessments, penalties and interest with respect thereto, in each case due and
payable on or before the date hereof or by reason of the sale of the Purchased
Assets have been paid by Seller.
(b) Sales, Use and Excise Taxes. All sales, use and excise taxes
collectible with respect to all transactions connected with Seller's business
through the date hereof have been or will be collected, all amounts due in
connection therewith to state and local revenue authorities have been or will be
remitted to the appropriate authorities, and no lien or claim with respect
thereto will be asserted by such authorities before or after the date hereof.
(c) Withholding of Taxes. There has been withheld or collected from
each payment made to each employee of Seller the amount of all taxes (including
without limitation federal income taxes, Federal Insurance Contributions Act
taxes, and state and local income, payroll and wage taxes) required to be
withheld or collected therefrom prior to the date hereof and the same have been
paid to the proper tax depositories or collecting authorities.
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4.10 Employee Benefit Plans. Except as provided herein, Buyer, by reason
of the transactions contemplated by this Agreement, will not incur any claims,
losses, damages, costs, and expenses with respect to or in connection with any
pension, welfare, fringe, or other employee benefit plan maintained or
contributed to by Seller or any predecessor that provides or provided benefits
to any current or former employees or other parties who performed services for
Seller (or their beneficiaries or dependents).
4.11 No Material Misstatements or Omissions. The representations and
warranties of Seller in this Agreement do not contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made therein not misleading.
4.12 Continued Representations. Each of the representations and warranties
contained in this Article IV or in any certificate or document delivered
pursuant to the provisions of this Agreement, shall survive the delivery of this
Agreement and all documents relating hereto.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
To induce Seller to enter into this Agreement and to sell the Purchased
Assets, Buyer hereby represents and warrants to the Seller that:
5.1 Corporate Organization and Authority. Buyer is a corporation duly
organized and validly existing in good standing under the laws of Rhode Island,
with full corporate power and authority to conduct its business as now conducted
and to enter into and perform its obligations under this Agreement. Buyer's
execution, delivery and performance of this Agreement and its acquisition of and
payment for the Purchased Assets have been duly authorized by all requisite
corporate action on the part of Buyer and this Agreement constitutes, and all
agreements and other instruments and documents to be executed and delivered by
Buyer hereunder will constitute, Buyer's legal, valid and binding obligations,
enforceable against Buyer in accordance with its terms.
5.2 Absence of Conflicts and Consent Requirements. Buyer's execution and
deliver of this Agreement and performance of its obligations hereunder,
including the purchase of and payment for the Assets hereunder, do not and will
not conflict with, violate or result in any breach or default or, with notice or
lapse of time, or both, constitute a default, under Buyer's Articles of
Incorporation or Bylaws or any mortgage, indenture, agreement, instrument or
other contract to which Buyer is a party or any judgment, order, decree, law,
statute, regulation or other judicial or governmental restriction to which Buyer
is subject. Buyer's execution and delivery of this Agreement and performance of
its obligations hereunder, including the purchase of and payment for the
Purchased Assets, do not and will not require the consent of, or any prior
filing with or notice to, any governmental authority or other third party.
5.3 Continued Representations. Each of the representations and warranties
contained in this Article IV or in any certificate or document delivered
pursuant to the provisions of this Agreement, shall survive the delivery of this
Agreement and all documents relating hereto.
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ARTICLE VI
CERTAIN COVENANTS AND AGREEMENTS
6.1 Seller's Employees. Buyer may offer employment to Seller's employees
on such terms and conditions as Buyer may deem appropriate in its sole
discretion. In no event shall Buyer be or become liable to Seller or its
employees on account of wages, vacation pay, severance pay, benefit or any other
matter relating to or arising in connection with such employees' employment by
Seller or the Shareholder, except as expressly included in the Assumed
Liabilities.
6.2 Further Assurances. Each of Seller and Buyer agrees that at any time
and from time to time it will promptly execute and deliver to the other such
further assurances, instruments and documents and take such further action as
the other may reasonably request in order to carry out the full intent and
purpose of this Agreement.
6.3 Fees, Expenses and Sales Taxes. Seller, Buyer, and the Shareholder
shall each pay its or his own fees and other costs or expenses incident to the
negotiation, preparation and execution of this Agreement and the transactions
contemplated hereby, including the fees and expenses of its or her own counsel,
accountants, appraisers and other experts.
6.4 No Brokers. Each of Seller and Buyer represents that no broker or
finder has been involved or engaged by it in connection with the transactions
contemplated hereby.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification of Buyer by Seller and the Shareholder. Seller and the
Shareholder, jointly and severally, shall indemnify and hold Buyer, Buyer's
Principals and its and their attorneys, affiliates, representatives, agents,
officers, directors, successors or assigns harmless from and against any
liability, loss, cost, expense, judgment, order, settlement, obligations,
deficiency, claim, suit, proceeding (whether formal or informal), investigation,
Lien or other damage, including, without limitation, reasonable attorneys' fees
and expenses (collectively, "Damages"), resulting from, arising out of or
incurred with respect to:
(a) a breach of any representation, warranty, covenant or agreement
of Seller or the Shareholder contained herein; or
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(b) the Excluded Liabilities.
7.2 Indemnification of Seller. Buyer shall indemnify and hold Seller and
Shareholder and their attorneys, affiliates, representatives, agents, officers,
directors, successors or assigns, harmless from and against any Damages
resulting from, arising out of, or incurred with respect to:
(a) a breach of any representation, warranty, covenant or agreement
by Buyer contained herein; or
(b) the Assumed Liabilities.
ARTICLE VIII
MISCELLANEOUS
8.1 Merger Clause. This Agreement contains the final, complete and
exclusive statement of the agreement between the parties with respect to the
transactions contemplated herein and all prior or contemporaneous written or
oral agreements with respect to the subject matter hereof are merged herein.
8.2 Amendments. No change, amendment, qualification or cancellation hereof
shall be effective unless in writing and executed by each of the parties hereto
by their duly authorized officers.
8.3 Benefits and Binding Effect. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. Buyer may form a wholly-owned subsidiary or other business entity
for the purpose of assuming all of Buyer's rights and obligations under this
Agreement.
8.4 Notices. All notices, requests and demands and other communications
hereunder must be in writing and shall be deemed to have been duly given when
personally delivered, or when place in the United States Mails and forwarded by
Registered or Certified Mail, return receipt requested, postage prepaid, or
delivered pre-paid by a nationally recognized courier service, addressed to the
party to whom such notice is being given at the following addresses:
If to Seller or the Shareholder:
Infinite Group, Inc.
000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx, President
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With a copy to:
Xxxxxxx X. Xxxx, Esq.
Morse, Zelnick, Rose & Lander, LLP
000 Xxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
If to Buyer:
Rolben Acquisition Company
Xxx Xxxxxxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
With a copy to:
Xxxxxx X. Xxxxxxx, Xx.
Cameron & Xxxxxxxxx LLP
00 Xxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000
Any party may change the address(es) to which notices to it are to be sent by
giving notice of such change to the other parties in accordance with this
Section.
8.5 Captions. The captions are for convenience of reference only and shall
not be construed as a part of this Agreement.
8.6 Governing Law. This Agreement shall be construed, interpreted,
enforced and governed by and under the laws of Rhode Island.
8.7 Exhibits. All of the Exhibits hereto referred to in this Agreement are
hereby incorporated herein by reference and shall be deemed and construed to be
a part of this Agreement for all purposes.
8.8 Severability. The invalidity or unenforceability of any one or more
phrases, sentences, clauses or provisions of this Agreement shall not affect the
validity or enforceability of the remaining portions of this Agreement or any
part thereof.
8.9 Counterparts. This Agreement may be executed in several counterparts
and on separate signature pages, each of which shall be deemed an original, but
all of which shall constitute one and the same instrument. Delivery of an
executed counterpart of this Agreement by telecopier shall be effective as
delivery of an original executed counterpart. Any party delivering such a copy
by telecopier shall also deliver an original counterpart, but the failure to do
so shall not affect the validity, enforceability or binding effect of this
Agreement.
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8.10 Time. Time is of the essence of this Agreement and all of its terms
and conditions.
[SIGNATURE PAGE FOLLOWS]
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[SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]
IN WITNESS WHEREOF, Seller, the Shareholder and Buyer have each executed
this Agreement or caused this Agreement to be executed by their respective duly
authorized officers as of the day and year first above written.
LASER FARE, INC.
By:_____________________________
President
INFINITE GROUP, INC.
By:_____________________________
President
ROLBEN ACQUISITION COMPANY
By:_____________________________
Vice President
